Raghuram Rajan RBI Governor
RBI Governor: Economy is recovering, process is volatile. Picture (Representational Image)Reuters

Markets eagerly wait for this year's first policy meeting of the Reserve Bank of India (RBI), scheduled for 7 April, though the consensus forecast is maintenance of status quo at 7.5 percent.

RBI Governor Raghuram Rajan has already surprised the markets with two rate cuts in January and March, which suggests a low probability of any policy action by the central bank at its meeting on Tuesday.

Here is what analysts expect from RBI's meeting:

We expect the RBI to cut the repo rate 25bp in Q2 2015 before entering into a pause. The timing – between April and June remains a close call; our bias is to expect a cut in June. We also expect the RBI to sound more comfortable given the ongoing disinflation. - Barclays Capital

We expect the RBI to leave the policy rate unchanged at 7.5% at its 7 April policy meeting, based on its statement after the inter-meeting rate cut in March. The central bank is unlikely to have gathered new information on the long list of preconditions it set in March for further rate cuts. It may consider measures to improve monetary policy transmission. Given our expectation of average CPI inflation of 5.4% in FY16 (starting 1 April 2015) and assuming the RBI is comfortable with real policy rates at 150-200bps, we see scope for another 25-50bps of rate cuts this fiscal year. Consecutive inter-meeting rate cuts in January and March have made it difficult to forecast the exact timing of the next rate decision, however. - Standard Chartered Global Research

In India, inflationary pressures have been easing in recent months, with prices rising by 5.4% y/y in February. After reducing the benchmark rate by 25 bps following an unscheduled monetary policy meeting in February, we expect monetary authorities to hold the key rate at 7.50% this week. Nevertheless, the monetary easing phase will likely take the benchmark interest rate down by another 50 bps by the end of the third quarter of this year to 7.0%. - Scotiabank Economics

The RBI policy announcement (06.30 BST, Tuesday) is likely to be a close call, but we think that the RBI will follow up on March's unscheduled rate cut and lower the repo and reverse repo rates by another 25bp, to 7.25% and 6.25%, respectively. - Capital Economics

We see room for another cut in the repo rate by the RBI but we don't expect it as soon as this week's meeting as there haven't been any significant developments in terms of data and fiscal consolidation efforts since the last cut in March. However, RBI may cut the cash reserve ratio this week in order to reduce banks' funding costs and hence reinforce the effect of its past cuts. We believe that RBI easing expectations will persist as long as inflation stays below 6%. - Credit Agricole Corporate and Investment Bank

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